LinkedIn Founder: How to Fix the Way We Work

ByReid Hoffman, Ben Casnocha & Chris Yeh

Reid Hoffman, Ben Casnocha and Chris Yeh are the authors of “The Alliance: Managing Talent in the Networked Age,” published July 8 by the Harvard Business Review Press. Hoffman is the executive chairman and co-founder of LinkedIn and a partner at venture capitalist firm Greylock; Casnocha and Yeh are San Francisco-based entrepreneurs.
The employment relationship is broken.

Reid Hoffman, co-founder and executive chairman of LinkedIn

In an era of at-will employment, company loyalty is scarce and long-time ties are scarcer. “It’s just business” has become the ruling philosophy—especially when layoffs hit—and workers are encouraged to think of themselves as “free agents.”

Yet bosses and hiring managers still ask workers to commit to the company without committing to them in return. This creates a relationship built on mutual self-deception.

It’s time for a new way of doing business: the Alliance and the tour of duty framework.

When Reid first founded LinkedIn Corp., he offered an explicit deal to talented employees: If they signed up for a 2-4 year tour of duty and made an important contribution to some part of the business, Reid and the company would help advance their careers, preferably in the form of another tour of duty at LinkedIn. This approach worked: the company got an engaged employee who worked to achieve tangible results for LinkedIn. The employee transformed his career by en­hancing his portfolio of skills and experiences.

The finite term of the tour of duty provides crisper focus and a mutually agreeable time frame for discussing the future of the relationship. It gives a valued employee concrete and compelling reasons to “stick it out” and finish a tour. Most importantly, a realistic tour of duty lets both sides be honest, which is a necessity for trust.

We have defined three different flavors of the tour of duty: Rotational, Transformational, and Foundational. For your star employees, a Transformational tour is best. It’s negotiated one-on-one by you and your employee, and is defined by the completion of a specific, mutually beneficial mission.

Harvard Business Review Press

The central promise of a Transformational tour is that the employee will have the opportunity to trans­form his career by transforming the company’s business. And as a Transformational tour of duty enters its final stage, you and your employee can start to negotiate a follow-up tour of duty to keep the employee at the company.

Making a real commitment also allows an employee to accomplish something substantive. Google Inc. chairman Eric Schmidt told us he also likes to define tours in terms of five years—a couple of years to learn, a couple of years to do the job and scale the projects, and a year to arrange the transi­tion.

Even the alliance can’t prevent all employee departures. Jeff Bezos couldn’t have started Amazon.com Inc. if he stayed an investment banker. But if an employee eventually leaves the company, the split can be made amicably and on a timetable that works for both parties, honoring their mutual obligations and investment.

As a manager, would you rather manage a planned separation from an employee who has completed her final tour of duty? Or would you rather scramble to perform damage control on a sudden departure?

As an employee, would you rather depart amicably and become a valued member of the company’s alumni network? Or would you prefer to depart under a cloud of acrimony?

Building an alliance based on honesty and trust, and structuring a clear career progression using successive tours of duty, lets you attract, manage, and retain the entrepreneurial stars you need to transform your company.

Great people are always a flight risk, but when both you and they have clear expectations for the mutual benefits of your alliance, you can hold on to them for longer, and accomplish amazing things.

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